Mr. Syed Ateeq Aga, Bangalore V. DCIT, Bangalore

ITA 1337/BANG/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7733 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 23-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SARAVANAN B JT
• Assessee Lawyers: H V GOUTHAMA
• Keywords: Unexplained investment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1337/BANG/2011 ASSESSMENT YEAR : 2007-08 MR. SYED ATEEQ AGA, NO.14, BERILE STREET, LANGFORD TOWN, BANGALORE 560 025. PAN : AEPPA 2888D VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI H.V. GOUTHAMA, C.A. RESPONDENT BY : SHRI SARAVANAN, B., JT. CIT(DR) DATE OF HEARING : 25.04.2012 DATE OF PRONOUNCEMENT : 25.04.2012 O R D E R PER N.K. SAINI, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER D ATED 27.10.2011 OF THE CIT(APPEALS)-I, BANGALORE. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L: 1) THE LEARNED COMMISSIONER OF INCOME TAX, (APPEA LS)-I, BANGALORE, ERRED IN CONFIRMING THE ADDITIONS OF RS. 57,25,000/- MADE BY THE LEARNED DEPUTY COMMISSIONER OF INCOME T AX, ITA NO.1377/BANG/11 PAGE 2 OF 5 CIRCLE 11(1), BANGALORE, BEING VALUE OF EQUITY SHAR ES BROUGHT INTO THE BOOKS OF ACCOUNTS DURING THE YEAR UNDER CO NSIDERATION. 2) THE LEARNED COMMISSIONER OF INCOME TAX, (APPEAL S)-I, FAILED TO UNDERSTAND THAT, THE INVESTMENT TOWARDS S HARE CAPITAL OF M/S. AGA FRUITS PVT. LTD., WAS MADE DURING THE ACCO UNTING YEAR 31.03.2005 RELEVANT TO ASSESSMENT YEAR 2005-06. 3) AS ALREADY ADMITTED BY THE HONBLE COMMISSIONER OF INCOME TAX (APPEALS), THE REAL INVESTMENT OF RS.57. 25 LAKHS DOES NOT RELATE TO ASSESSMENT YEAR 2007-08. THEREFO RE, THE LEARNED ASSESSING OFFICER WAS WRONG IN ADDING RS.57 .25 LAKHS AS UNEXPLAINED INVESTMENT DURING THE YEAR UNDER CON SIDERATION. FOR THE ABOVE AND ANY OTHER GROUNDS THAT MAY BE ADV ANCED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT, THE APPE AL BE ALLOWED. 3. FROM THE ABOVE GROUNDS, IT IS GATHERED THAT ONLY GRIEVANCE OF THE ASSESSEE RELATES TO CONFIRMATION OF ADDITION OF Q 57,25,000 MADE BY THE AO ON ACCOUNT OF VALUE AND EQUITY SHARES. 4. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE FILED HIS RETURN OF INCOME ON 11.03.2008 DECLARING AN INCOME OF Q 3,24,000 AND AGRICULTURAL INCOME OF Q 7,64,500. THE SAME WAS PROCESSED U/S. 143(1) OF THE INCOME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS T HE ACT IN SHORT], LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THERE WAS A DIFFERENCE OF Q 57,25,000 IN THE CLOSING BALANCE AS ON 31.03.2006 AND OPENING BALANCE AS ON 01.04.2007. THE AO POINTED OUT THAT THE BALANCE IN THE CAPITAL ACCOUNT AS ON 3 1.3.2006 WAS AT Q 70,81,416 AND AS ON 01.4.2007 AT 1,28,06,416, THUS THERE WAS DIFFERENCE OF Q 57,25,000 WHICH HE CONSIDERED AS INCOME FROM OTHE R SOURCES AND MADE THE ADDITION. THE ASSESSEE CARRIED THE MATTER TO T HE LD. CIT(A) AND SUBMITTED AS UNDER:- ITA NO.1377/BANG/11 PAGE 3 OF 5 DIFFERENCE IN CAPITAL ACCOUNT: IN THE INCOME TAX A SSESSMENT, THE ASSESSING OFFICER HAS ADDED A SUM OF RS. 57,25, 000/- AS UNEXPLAINED INVESTMENT. THIS AMOUNT RELATES TO THE SHARE CAPITAL IN THE PVT. LTD. COMPANY M/S. AGA FRUITS PVT. LTD. DURING THE FINANCIAL YEAR 2004-05, AGA FRUITS PVT.LTD. HAS INC REASED THEIR AUTHORISED CAPITAL FROM RS.1,98,00,000/- TO RS. 5,0 0,00,000/-. DURING THE FINANCIAL YEAR 2004-05 CERTAIN SHARES WE RE ALLOTTED TO THE EXISTING SHARE HOLDERS OF THE COMPANY AND THE I NCREASE IN PAID UP CAPITAL WAS MADE DURING THE FINANCIAL YEAR 2004-05 BY AGA FRUITS PVT.LTD. THE SHARES ALLOTTED BY AGA FRUI TS PVT.LTD., WHICH WAS DURING ACCOUNTING YEAR ENDED 31ST MARCH 2 005, BY INADVERTENCE WAS NOT REFLECTED IN THE STATEMENT OF AFFAIRS OF THE ASSESSEE. THEREFORE, TO FALL IN LINE WITH THE BOOKS OF AGA FRUITS PVT.LTD., THE ENTRY OF RS.57,25,000/- WAS MADE IN T HE BOOKS OF ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THERE IS NO FRESH INVESTMENT DURING THE YEAR UNDER CONSIDERATION. THE REFORE, THE ADDITION OF RS. 57,25,000/- CANNOT BE MADE DURING. 6. THE LD. CIT(APPEALS) AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE CONFIRMED THE ADDITION MADE BY THE AO BY O BSERVING AS UNDER:- 12. I HAVE GONE THROUGH THE ABOVE. THE INCREASE IN CAPITAL ACCOUNT IS AN ADMITTED FACT. IT IS ALSO ADMITTED TH AT THE REAL INVESTMENT OR INCREASE TOOK PLACE IN A.Y. 2005-06 B UT NO ENTRY HAD BEEN MADE IN BOOKS OF THE APPELLANT. I OBSERVE THE AR HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF SUCH INVESTM ENT IN THIS YEAR. EVEN THE RETURN OF AY 2005-06 HAS NOT BEEN RE VISED YET TO MAKE THE INVESTMENT GO THROUGH THE SCANNER OF THE D EPARTMENT OF THAT YEAR. THE ENTRY IS LEGALLY NOT ALLOWABLE IN TH IS YEAR BECAUSE IT DOES NOT PERTAIN TO THIS A.Y. 2007-08. HENCE A.O. H AS RIGHTLY DISALLOWED THE SAME HOLDING SUCH INCREASE IN CAPITA L ILLEGAL. APPEAL IS DISMISSED. ADDITION IS UPHELD. 7. NOW ASSESSEE IS IN APPEAL. THE LD. COUNSEL OF T HE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW AND FURTHER SUBMITTED THAT THE LD. CIT(A) HIMSELF ADMITTED THAT THE REAL INVESTMENT OR INCREASE IN THE CAPITAL ACCOUNT TOOK PLACE IN A.Y. 2005-06, THEREFORE HE WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION FOR TH E YEAR UNDER CONSIDERATION ITA NO.1377/BANG/11 PAGE 4 OF 5 I.E. A.Y. 2007-08. IT WAS SUBMITTED THAT THE ASSES SEE COULD NOT MAKE THE BOOK ENTRY FOR THE PERIOD RELEVANT TO A.Y. 2005-06, THEREFORE THE DIFFERENCE WAS RECTIFIED AS ON 1.4.2007, AS SUCH THERE WAS NO MISTAKE AND THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE AO. 8. IN THE RIVAL SUBMISSIONS, THE LD. DR STRONGLY SU PPORTED THE ORDERS OF AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THERE WAS A DIFFERENCE IN THE CAPITAL ACCOUNT AS ON 31.3.2006 AND 1.4.2007, THERE FORE THE DIFFERENCE WAS RIGHTLY ADDED AS INCOME OTHER SOURCES AND THE LD. C IT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE AO. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT APPEARS THAT IN F.Y. 2004-05 CERTAIN SHARE S WERE ALLOTTED TO THE EXISTING SHAREHOLDERS OF M/S. AGA FRUITS PVT. LTD., BUT THE SAID FACT CAME TO THE KNOWLEDGE OF THE ASSESSEE ON A LATER DATE, HE T HEREFORE RECTIFIED THE CAPITAL ACCOUNT AS ON 1.4.2007. THE LD. CIT(A) ALS O ADMITTED IN PARA 12 OF THE IMPUGNED ORDER THAT THE REAL INVESTMENT OR INCR EASE TOOK PLACE IN A.Y. 2005-06, BUT NO ENTRY HAD BEEN MADE IN THE BOOKS OF ACCOUNTS. WE THEREFORE CONSIDERING THE TOTALITY OF FACTS DEEM IT APPROPRIATE TO REMAND THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WIT H A DIRECTION TO VERIFY AS TO WHETHER THE REAL INCREASE TOOK PLACE IN THE A.Y. 20 05-06 AND THAT HAS BEEN REFLECTED BY THE OTHER PARTY I.E., M/S. AGA FRUITS PVT. LTD. AND IF THE AFORESAID FACTS AS CLAIMED BY THE ASSESSEE ARE FOUN D TO BE CORRECT, THEN NO ADDITION CAN BE MADE FOR THE YEAR UNDER CONSIDERATI ON BECAUSE THE ASSESSEE ONLY RECTIFIED THE MISTAKE IN THE CAPITAL ACCOUNT AND NO FRESH ITA NO.1377/BANG/11 PAGE 5 OF 5 INVESTMENT HAD BEEN MADE IN THE YEAR UNDER CONSIDER ATION. ACCORDINGLY, THIS ISSUE IS SET ASIDE TO THE FILE OF THE ASSESSIN G OFFICER. 10. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF APRIL, 2012. SD/- SD/- ( SMT. P. MADHAVI DEVI ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 25 TH APRIL , 2012. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.